Google’s latest Adwords changes will have a massive effect on advertisers

In this guest post Tom Sadler discusses why the new update to how Google displays AdWords adverts will affect every one who uses it.

I believe that this will affect every single one of AdWords advertisers.

What is it?

Google has fundamentally changed the way that it displays its Google AdWords results. Replicating their mobile experience they are removing AdWords adverts from the right hand side.

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This means that adverts that were previously above the fold in positions 5-7 are now relegated to the bottom of the page. The advert in position 4 will now move above the organic results for high volume searches.

The results from these tests have given them the confidence to start rolling this out globally throughout the month of February.

Let’s take the results from the high volume search term ‘Credit Cards’ and see what impact this change has had upon the search results.

Old Search Results

New Search Results

Why does it matter?

For a high demand search term such as ‘Credit Cards’ the CPC (costs per click) for the top 3 positions are very high. The Google Keyword Planner (the result of which we need to take with a pinch of salt) suggests bidding $26.03.

In order to rank AdWords adverts Google uses a number of factors including Quality Score, Ad Extensions and Max CPC. This means that whilst Max CPC is not the sole factor in deciding the position it has a massive influence. Bidding a lower Max CPC enabled advertisers to still appear for searches for “Credit Cards” but to pay a much cheaper CPC.

Indago Digital has found that for some search terms, position 5 generated the highest ROI for clients due to the cheaper CPC and it still appearing at the top of the page. Google’s update changes everything. These high-performing position 5 adverts have now been bumped to the bottom of the page.

What should you do?

Get the person that runs your AdWords campaigns to check for high performing campaigns with an average position of 5 or higher. These are the campaigns that are likely to be impacted by the AdWords change.

I believe that campaigns that are currently sitting in average position 1-4 will also be affected. Advertisers who were previously getting great results from positions 5 and above will now be forced to increase their CPC’s to ensure that their paid placements don’t disappear into the ether.

Why has Google done it?

Google’s original slogan was “Don’t be evil”, whilst calling this change evil would be greatly overstepping the mark there is no doubt this has been done to increase CPC’s for Google’s most competitive search terms.

Google claims this change has taken place to replicate mobile and desktop results. My view is it’s another in the long line of Google updates to increase CPC’s that have varied from enhanced campaigns to Google AdWords Express to including close variants for exact match keywords.

Worth a mention too that having 4 paid positions up top effectively pushes one more organic listing below the fold. So we have more competition for paid positions and less competition from organic positions. Don’t be evil!

Nice explanation, wish we had a crystal ball to see how this is going to work out for consumers and advertisers. As an AdWords management company, we’re really interested to see how this is going to affect our work for clients. We wrote an article as well really getting into the nitty gritty to try and decode what these changes are going to lead to – http://www.mattersolutions.com.....arch-page/

What about the issue where the same business has multiple websites and Adwords Accounts and where their ads appear in several ad slots for popular searches. The search I am looking at which is a very competitive one has ads for the same business under different domain names/web sites in slots 3,4 and 6 for a popular search term. This effectively reduces the opportunities for other businesses to get their message across to consumers.Consumers are also suffering in that they are being mislead into thinking they are getting competitive quotes.

And PLEASE don’t suggest that a complaint be made to Google because that has been done in the past about other issues and ended up being what looks awfully like a penalty being levied on the complainant – ie. their site’s free first page results completely disappeared.